As a real estate agent, have you ever wondered what motivates clients? It may be a job change or some other event that drives them to seek a new home. However, it also could be some other factor with seeds planted on social media.
Whenever clients are considering large financial decisions, they often turn to someone in their social network for guidance, regardless of experience.
According to the most recent S&P/Case-Shiller index, home values are increasing, rising 5.9 percent to a 33-month high. Many renters are now itching to make an offer.
And as your clients see their friends reap the benefits of homeownership, it makes them itch to get into the pool, according to a study published last year by economists from Facebook, Harvard and New York University.
Over the last decade, the internet has evolved into an information hub, social media evolved into an effective marketing tool, and comments evolved into positive, negative and neutral.
“People are influenced by their friends’ experiences,” NYU finance professor Theresa Kuchler, one of the study’s co-authors, told Money. “People whose friends see house prices go up more are more optimistic about real estate and invest more in real estate.”
Moreover, the researchers also discovered that if a client had a friend whose home value surged by 5 percent, they were 3.1 percent more likely to move from renting to owning, even if they lived in another city.
Another telling factor worth noting is the effect seems to hold across distant geographies — which the researchers demonstrated by excluding interactions between friends living close to each other.
“If two regions are strongly connected through friendship networks, then if house prices in one region go up for whatever reasons, individuals living in the connected region will hear about this,” Kuchler said. Those optimistic individuals will be more likely to buy, and “as a result, house prices in the connected region might also go up,” she said.
On the flip side, if a friend’s property suffers a decline in value and they note this on social media, a client may be less likely to decide to buy a home.
For agents, understanding human behavior is key in being able to meet the needs of an ever-changing client base.
As humans’ it is a part of nature to want to measure up to our peers and everyone wants to “keep up with the Joneses. However, talking to a professional is a better option. Agents can position themselves to be the voice of experience for these clients.